Austin City Council moves forward in bid to acquire downtown land

Sep 10, 2014
Austin Business Journal

The Austin City Council voted Tuesday to take steps toward acquiring 75 acres of prime real estate from the state of Texas for about $28.5 million. The vote, which was taken during the extensive budget hearings that began Monday, was 6-1 in favor

Mayor Lee Leffingwell cast the lone dissenting vote, saying he didn’t feel comfortable pursuing the acquisition given that it would involve borrowing the money and passing the cost along to the taxpayer

The land is near MoPac Expressway and West 45th St. and has been on the radar of private developers such as Austin-based Stratus Properties. According to the Austin American-Statesman, Stratus Properties Chairman and CEO Beau Armstrong said his company had been in talks with San Antonio-based HEB Grocery Co. about a plan that would include extensive open space. He said he was surprised that the city would spend money to buy the land when it could control the development through zoning and review processes

But proponents of acquiring the land — Council members Laura Morrison, Kathie Tovo and Bill Spelman, in particular — said current rules and regulations wouldn’t compel developers to create affordable housing in that neighborhood, which is one of their main goals

Testimony provided by affordable housing advocates during Tuesday’s hearing indicated that private developers had only provided a small handful of rent controlled units in recent years. They lamented that another privately controlled mixed-use development probably wouldn’t add to the modest amount of affordable housing stock

Morrison and Tovo said such a strategically located site near excellent schools and near bus lines presented a rare opportunity for the city

That didn’t convince Leffingwell, who said he “had a big hangup” with even initiating a first step toward taking on more debt without voter approval

But other Council members, who had expressed reservations about the acquisition before Tuesday’s in-depth discussions during the annual budget hearings, said they had changed their minds because the resolution put forth by Morrison only seeks to proceed with due diligence and not with the actual purchase

Council member Mike Martinez said he wanted it to be “crystal clear” to taxpayers that the city has not committed any dollars but rather is instructing city staff to obtain an appraisal and look into the matter more closely. Mayor Pro Tem Sheryl Cole asked for as much financial analysis as possible from the staff, including some return on investment details based on different development scenarios

Whether the Texas Department of Transportation, which owns the land in tandem with the Texas State Cemetery Committee, is amenable to the council’s resolution remains to be seen

State officials had given the city until Sept. 12 to decide whether to buy the land

Martinez wondered aloud whether the state will move on to other suitors without the city’s firm financial commitment

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